Old Mutual On the Money

What to consider before resigning from your job

As May begins and South Africa honours Workers’ Month, the country’s employees are having to contend with a volatile economic climate and the sharply rising cost of living. This tough economic environment calls for cautious decisions, says John Manyike, Head of Financial Education at Old Mutual.

“Before making any changes that could affect your long-term financial wellbeing, carefully weigh up the pros and cons. This applies particularly to deciding whether or not to resign from your current job.”

Six key things to consider before handing in your notice:

1. FIRST, do your homework - before you jump ship, ensure you do your research on the financial stability of the company you are looking at joining. Downsizing and retrenchments are unfortunately a reality for some sectors in this challenging economic climate, especially given the recent downgrading of our economy.

2. Explore the opportunities at your current workplace. Could new doors open for you if you sharpen your professional skills, invest in your personal development, upgrade your technology skills or complete an educational course? If you develop those skills that are in demand and very relevant to your current employer or your industry, you make yourself much more valuable – and put yourself in a stronger position to negotiate a salary increase or promotion.

3. Don’t get tempted by a ‘big’ salary. Make sure you are comparing apples with apples. Look at other benefits that your company is offering, which may be more valuable than a slightly higher salary, e.g. medical subsidies and retirement fund employer contributions. Request a dummy payslip from your potential new employer - to gauge what your future take home pay could look like. Remember that when your salary increases, you may enter a new (and higher) tax bracket.

4. Consider the location of the new employer. Obviously, if the office is situated a lot further away, then your additional travel costs should be factored into your calculations before you accept the offer. The increased travel expenses could wipe out any salary increase.

6. If you’re tempted to resign to access your retirement fund and use the cash payout to help fund your living costs or pay off your debts, think again. “Workers who do this are actually borrowing money from their future,” says Manyike.

“This is a major concern, and one of the reasons why our savings rate as a nation is poor. People who cash in their retirement funds instead of reinvesting or preserving the proceeds invariably have to rely on the State or their children when they retire.”

This situation is contributing to the growth of what is now termed the “sandwich generation”, the embattled middle generation that is financially responsible for both their ageing parents and their dependent children and even grandchildren.

“Debt should not be the reason for your resignation,” Manyike stresses. “Rather face your financial situation head on - however poor it might be - and put a strong financial plan together that will help you pay off your debts as quickly as possible and ensure you live within your means while securing a better financial future.”

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